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#1497790 - 01/20/11 05:59 PM
Dodd-Frank MLO Compenstion
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100 Club
Joined: Apr 2004
Posts: 131
Texas
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How are other bank's planning on compensating their MLO's after 4-1-11 when we can no longer base our MLO commissions on the loan's interest rate or other terms according to Dodd-Frank.
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#1497794 - 01/20/11 06:01 PM
Re: Dodd-Frank MLO Compenstion
Mindy
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10K Club
Joined: Jul 2001
Posts: 83,364
Galveston, TX
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Flat dollar amount per loan or percentage based only on loan amount.
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#1497940 - 01/20/11 08:06 PM
Re: Dodd-Frank MLO Compenstion
rlcarey
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100 Club
Joined: Apr 2004
Posts: 131
Texas
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That is all we could think of too. Thanks for you input Randy.
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#1508425 - 02/10/11 09:45 PM
Re: Dodd-Frank MLO Compenstion
rlcarey
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Member
Joined: Jan 2011
Posts: 58
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Flat dollar amount per loan or percentage based only on loan amount. We are going to do the same thing, but are trying to figure out what is a fair amount per loan. Can anybody share the amount that they pay to their originators? We were thinking about 65 basis points per loan...
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#1508553 - 02/11/11 12:59 PM
Re: Dodd-Frank MLO Compenstion
ComplianceNerd
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Diamond Poster
Joined: Jan 2010
Posts: 1,028
Utopia
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Our MLO's are currently paid either straight commission or base plus commission. The commission is based on volume: 1.$0-5,000=0 2.5,0001 to 10,000= 20bps 3.10,000 to 12,500= 35bps 4.12,501 and above= 50bps I believe that our current system is fine. What is everyone else doing in regards to policy? Is the contract enough or does it belong in the HR policy?
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#1508721 - 02/11/11 03:07 PM
Re: Dodd-Frank MLO Compenstion
Soccer
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10K Club
Joined: Oct 2006
Posts: 14,390
Cheeseheadland
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Over what period is that?? is that a month or??
And is that overall production for said period, or per loan?
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#1508733 - 02/11/11 03:13 PM
Re: Dodd-Frank MLO Compenstion
#Just Jay
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Diamond Poster
Joined: Jan 2010
Posts: 1,028
Utopia
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Straight commission is paid out monthly, Base plus commission is paid on a quarterly basis and is subject to the Originator meeting certain base level targets so as to assure that year end performance target minimums are attained
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#1511284 - 02/17/11 03:14 PM
Re: Dodd-Frank MLO Compenstion
RR Joker
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Georgia Plum
Unregistered
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Attended a webinar yesterday and learned that the DOL ruling not only requires payment of Overtime, it also requires a minimum wage be paid. Our MLO is commission only. Some months he may have nothing close. Consequently he would get no pay. But with the DOL ruling, in those months we'd be required to pay him the minimum wage. Just another thing to factor into the new compensation package.
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#1513119 - 02/22/11 08:53 PM
Re: Dodd-Frank MLO Compenstion
MyKidsMom
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Georgia Plum
Unregistered
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Yes. The bank could only charge an amount and pay a commission based on percentage of loan amount, not any terms such as rate or term of the loan.
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#1519072 - 03/08/11 10:24 PM
Re: Dodd-Frank MLO Compenstion
Soccer
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New Poster
Joined: Sep 2008
Posts: 4
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I don't know if you've recieved a response to your compensation schedule, but I presented a similar schedule to the ABA and was told that it violated the rule. We're going to go to a flat percentage for all loans.
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#1519248 - 03/09/11 03:17 PM
Re: Dodd-Frank MLO Compenstion
pamwes
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10K Club
Joined: Oct 2006
Posts: 14,390
Cheeseheadland
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Hmmm.. My understanding is that the FED has blessed this com structure since the comp is not based on the terms of any one single loan. The comp is based only on aggregate loan volume levels, and the numbers needed to reach thatose levels would not be consistent form period to period, whatever you choose that period to be. Thus the comp would not even be directly based on the terms of any particular loan.
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#1519606 - 03/09/11 08:22 PM
Re: Dodd-Frank MLO Compenstion
#Just Jay
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Diamond Poster
Joined: Jan 2010
Posts: 1,028
Utopia
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I guess I'm not understanding this. Our compensation is based on the total loans per month not the value or specific product of each individual loan, and each month starts a clean slate. Like Just Jay described.
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#1519941 - 03/10/11 03:16 PM
Re: Dodd-Frank MLO Compenstion
Soccer
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Gold Star
Joined: Sep 2005
Posts: 332
Georgia
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Is there any documentation from the FED where they have belssed the tiered compensation structure? We currently have that in place and would like to keep it.
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#1519947 - 03/10/11 03:18 PM
Re: Dodd-Frank MLO Compenstion
rlcarey
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Platinum Poster
Joined: May 2008
Posts: 915
Orlando, FL
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Flat dollar amount per loan or percentage based only on loan amount. Maybe I am just being paranoid, but knowing how lenders think (because I used to be one myself), if they are compensated on a % of the loan amount...does anyone get concerned about possible Reg B violations? Because I guarantee that the lenders are going to steer clear of low income areas, or areas with low home values, etc. because they know they aren't going to make as much off of those loans.
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#1519971 - 03/10/11 03:33 PM
Re: Dodd-Frank MLO Compenstion
Many Hats
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10K Club
Joined: Oct 2006
Posts: 14,390
Cheeseheadland
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How do you pay them now??
Currently, we have a minimum commission in place.
I do agree though, this could become a problem.
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#1520154 - 03/10/11 05:32 PM
Re: Dodd-Frank MLO Compenstion
#Just Jay
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Diamond Poster
Joined: Jan 2010
Posts: 1,028
Utopia
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Our real estate area is made up of mostly low to moderate priced homes. With some limited areas of higher end homes. We only have 2 MLO's that cover all of our lending area but I can see your point in regards to steering clear of low income areas.
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#1520297 - 03/10/11 07:31 PM
Re: Dodd-Frank MLO Compenstion
Soccer
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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It's always bother me basing a fee on a % of a loan amount. It's age-old, but does wreak of discrimintory and red-lining issues.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#1520860 - 03/11/11 07:35 PM
Re: Dodd-Frank MLO Compenstion
RR Joker
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Gold Star
Joined: Sep 2005
Posts: 332
Georgia
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We act as a broker and we pay for the appraisal and credit report up front and collect at closing. If we accept compensation from the creditor can we accept payment from the borrower for the appraisal and credit fees?
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#1521369 - 03/14/11 05:46 PM
Re: Dodd-Frank MLO Compenstion
ATLbanker
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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That is a cost of services and should have nothing to do with compensation. You pay for the credit report and the appraisal and then credit at closing, or retain for payment, if the loan doesn't close. Any overage should be refunded to the borrower.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#1563122 - 06/09/11 09:20 PM
Re: Dodd-Frank MLO Compenstion
RR Joker
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100 Club
Joined: Apr 2002
Posts: 213
KS
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Would it be permissible to compensate an MLO at a different fixed percentage based on a loan's purpose (different for a refinance compared to a purchase transaction)?
Would a loan's purpose be considered a term or condition or a factor that is a proxy for a loan term or condition?
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